Many real estate investors fail to achieve their dreams because they fail to properly launch their investing careers or because they reach a crossroads and don’t know which way to turn. Confused about the next step to take, they spin their wheels, do nothing, and eventually opt to walk away from real estate completely and go back to a life of mediocrity. To prevent this from happening to you, follow this simple seven step roadmap to success.
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You’ve done your “find a new city” research. You’ve been online and finally have pinpointed your new place to live. It’s official, your family is moving to Raleigh-Durham. You love the weather and mild climate. There are jobs available and unemployment is much lower than other places. You like the central location on the East Coast. The people are friendly. Some of the best schools in the country are there. People tell you what a family-friendly place Raleigh-Durham is and how much they love living in the “Triangle”.
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Rising construction costs could offer a long-term offset or buffer to the softening real estate market and falling home prices. Housing prices have more than doubled in most regions, but construction costs have risen as well. In many instances material costs have doubled and even tripled, so it may cost twice as much to build that house as compared to what it might have costs ten years ago.
If the median and average selling price of a home continues to decline, then construction of new homes will fall dramatically. Why? Because rising construction costs and falling housing prices will squeeze builder’s gross profit margins forcing them to postpone many future projects.
Subsequently, demand for housing at certain price points which allow builders to earn a reasonable profit will have to catch up with supply before builders resume development. This theoretically would keep the supply of housing in check, thus dampening the possible fall in prices.
This may offer some comfort for those who already own a home and fear how low prices might fall, but it won’t help those who already can not afford to buy a home of their own. Rising construction costs ultimately put a damper on any efforts to provide affordable housing. There are a lot of potential home buyers that might create demand for housing at various lower price points. But the market may never get to those lower price points. Construction costs could just remain too high and other market conditions alone may never create enough affordable housing.
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